Date: 20110121
Docket: T-25-10
Citation: 2011 FC 77
Ottawa, Ontario, January 21,
2011
PRESENT: The Honourable Mr. Justice Barnes
BETWEEN:
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CANADIAN IMPERIAL BANK OF COMMERCE AND
INTRIA ITEMS INC.
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Applicants
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and
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MURUGANANDARAJAH MUTHIAH
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Respondent
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REASONS FOR JUDGMENT AND
JUDGMENT
[1]
This
is an application for judicial review of a decision of Canada Labour Code
Adjudicator, Ruth Hartman, dismissing the Applicants’ jurisdictional objection
to the Respondent’s unjust dismissal complaint. The Applicants are related
companies and are hereafter referred to collectively as CIBC.
[2]
CIBC
contends that that Mr. Muthiah’s termination was the result of a discontinuance
of a job function leading to the elimination of his position which should have
led to the dismissal of his complaint in accordance with ss 242(3.1)(a) of
the Canada Labour Code, RS, 1985, c L-2) [Code]. That provision states:
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242. (3.1) No complaint shall be
considered by an adjudicator under subsection (3) in respect of a person
where
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242. (3.1) L’arbitre ne peut procéder à
l’instruction de la plainte dans l’un ou l’autre des cas suivants :
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(a) that person has been laid off
because of lack of work or because of the discontinuance of a function; or
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a) le plaignant a été licencié en
raison du manque de travail ou de la suppression d’un poste;
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It is of some significance to this
application that no transcript of the testimony given before the Adjudicator is
contained in the record, presumably because the proceeding was not recorded.
Background
[3]
Mr. Muthiah
was hired by CIBC as a clerical worker in 1998 and his employment was
terminated on October 7, 2008. CIBC took the position that Mr. Muthiah
was dismissed as a result of a national restructuring initiative and that he
was chosen because some of his responsibilities were capable of being performed
by others. When the position was eliminated, all of Mr. Muthiah’s functions
were either reassigned to others in the department or contracted out.
[4]
Mr. Muthiah
did not accept CIBC’s characterization of his dismissal and on November 7, 2008
he made a complaint of unjust dismissal under s 240 of the Code. CIBC
requested that the complaint be dismissed because the termination resulted from
“a lack of work or discontinuance of function” and was thereby excluded from
adjudication by ss 242(3.1) of the Code. It was this jurisdictional issue that
was resolved by the Adjudicator in favour of Mr. Muthiah and which is the
subject of this judicial review.
The
Decision Under Review
[5]
It
is clear from the Adjudicator’s decision that she understood the jurisdictional
issue she was required to resolve. She cited the relevant statutory provisions
and the leading authorities that had considered them. She accepted CIBC’s
point that ss 242(3.1) “recognizes an employer’s right to lay off employees for
economic, financial and cost cutting reasons as long as the decision is ‘genuine
and made in good faith’ and to reorganize the workforce and reassign the duties
of the employees laid off”. The Adjudicator also cited with approval the
holding in Fleiger v New Brunswick, [1993] 2 S.C.R. 651, 104 DLR (4th) 292 to
the effect that “the decentralization by assignment to others, of duties
formerly done by the holder of a position that no longer exists can be a
discontinuance of function”. The Adjudicator’s decision recognized, though,
that an employer’s stated motives cannot always be accepted at face value and
that it may be necessary to determine whether there was a mixed or ulterior
reason for a termination. Accordingly, a dismissal that is engineered or
disguised to prevent a challenge under the Code is not made in good faith and
does not fall within the protective ambit of ss 242(3.1).
[6]
The
Adjudicator heard evidence from CIBC’s Director of Cheque Remittance in Mississauga, Ms. Tina
Maltese. Ms. Maltese testified about CIBC’s national restructuring
initiative (Project Saturn) which was the ostensible basis for Mr. Muthiah’s
termination. Ms. Maltese knew nothing about Mr. Muthiah or the specific
reason for his termination and, interestingly, she acknowledged that in
Mr. Muthiah’s department the number of positions eliminated exceeded the Project
Saturn target by two. The Adjudicator characterized Ms. Maltese’s evidence
as follows:
[61] Ms. Maltese had no direct
knowledge and was not involved in the decision to eliminate Mr. Muthiah’s job.
When asked to explain how the elimination of Mr. Muthiah’s position was cost-effective,
Ms. Maltese confirmed she had no other information than that on these
spreadsheets and assumed the savings were that his salary was no longer being
paid.
[62] Ms. Maltese speculated that Mr.
Muthiah’s job elimination may have been part of PS’s general implementation of
cost reduction by “redistributing work to others” or having “work absorbed by
others”, but had no direct knowledge. She said that she was aware of the use of
a comparison matrix tool for identifying which of a group of persons doing the
same job would be eliminated. She said that a list of persons doing the same
job would be assessed and ranked using criteria such as accuracy, productivity
and personal attributes (adaptability, attitude, progressive discipline). The
person ranking lowest is the one whose job is eliminated. She said this process
applies “if more than one person is doing the same job” and that an
identification of the position as one chosen to be eliminated was a
prerequisite for an employee to qualify for transition benefits or
ETSP on termination.
[7]
To
establish the reason for Mr. Muthiah’s selection as a redundant employee,
CIBC led evidence from its Ontario Risk Manager, Mr. Rakesh Sharma. According
to the evidence Mr. Sharma had little direct managerial involvement with
Mr. Muthiah and the Adjudicator characterized his testimony in the
following way:
[67] Regarding the identification of
Mr. Muthiah’s position as one to be eliminated, Mr. Sharma appeared to have
little direct knowledge. He frequently referred to “Ms. Gordon’s vision”, which
he could not describe in any detail beyond stating that she had proposed that
data entry operators could separate non-BCA slips from BCA slips while
inputting data by making two piles rather than one,. thus eliminating the need
for this to be done by someone else after the 3 day period. There was nothing
in the record about this idea prior to the termination. Mr. Sharma said he was
aware of nothing in writing but said he attended a brief meeting with Ms. Proc
and Ms. Gordon where it was discussed, some time in September. He pointed
to the following email from Ms. Gordon, addressed to him and Ms. Proc, on
September 9, 2008, as evidence of “identification”. In apparent reference to
the subject line, which stated “Bag Opener name”, Ms. Gordon rather succinctly
responds, as follows:
Hello there:
As requested:
First Name: Last
Name:
Muruganandarajab (Rajah) MUTHIAH
Regards,
[68] While Mr. Sharma said this
email resulted from his meeting with Ms. Gordon and Ms. Proc, it is not obvious
how this was email related to their discussion of deposit slips.
[69] Mr. Sharma’s testimony was
clear that he took no action of his own regarding the merits of the position
elimination. He said that he made no inquiries or reviews, and simply concluded
after a while that he thought Ms. Gordon’s “vision” had merit and agreed with
it and that his primary involvement was ensuring that the proper approval
process was in place prior to meeting with Mr. Muthiah to tell him.
[8]
The
Adjudicator resolved the jurisdictional issue before her on the following basis:
[84] It is the case that neither Ms.
Maltese nor Mr. Sharma provided direct information regarding how Mr. Muthiah
became part of the very broad restructuring undertaken by CIBC as PS. The
projected head count reduction for November 2008 at his location was said to be
63, but 65 positions were eliminated. Whether Mr. Muthiah was part of the
planned 63 or the added 2 is a matter of speculation as no rationale has been
provided.
[85] Having reviewed the
jurisprudence in the context of the evidence presented by the employer in this
case, I am unable to conclude that section 242(3.1)(a) applies. While employers
are free to restructure and cut costs as they see fit, the Code applies unless
the employee bringing the complaint can be said to have been “laid off because
of a discontinuance of a function”.
[86] The employer has not met the
necessary onus to show that there has been a discontinuance of a function and
therefore I need not address at length whether he was “laid off because of” a
discontinuance of a function. Suffice to say, the Code exemption does not
contemplate reasoning done after termination.
[87] The case law is clear that
employers seeking to bar a complaint under the Code are expected to provide
evidence of a reasoned, not arbitrary, choice of elimination of a position for
cost-saving and to establish that this was the “actual and operative reason” at
the relevant time. Even if the operative reason in this case was simply “head
count”, it is not clear how Mr. Muthiah and his salary fit into the head count
restructuring decision.
[88] Mr. Sharma was only
superficially involved and had no direct information regarding how, when or why
Mr. Muthiah became part of the restructuring process. He said he never spoke
with Mr. Muthiah’s immediate supervisors or anyone and merely agreed with
a decision that had already been made by Ms. Gordon. This decision was
reportedly based solely on separating deposit slips by type, a small part of
Mr. Muthiah’s overall duties.
[89] Ms. Gordon or others more directly
involved in the decision to terminate were not called and the rationale
provided is largely anecdotal and indirect. The only contemporaneous evidence
provided for the choice of Mr. Muthiah for position elimination, and
eligibility for ETSP due to restructuring, was the terse email from Ms. Gordon
in September 200[8], providing only his name in an unspecified context.
[90] The evidence presented is
insufficient to establish the circumstances necessary to apply section 242(3.1)(a)
and remove my jurisdiction to hear Mr. Muthiah’s complaint. Whatever the merits
of that complaint, the onus for exclusion has not been met.
Issues
[9]
Did
the Adjudicator err in law in her interpretation of ss 242(3.1)(a) of the Code?
Analysis
[10]
CIBC
has framed the issue before the Court as a question of law going to
jurisdiction and as such it must be reviewed on the standard of correctness:
see Ocean Services Ltd. v Guenette, 2010 FC 188, [2010] FCJ No
214. Much of CIBC’s argument, however, is based on an analysis of the Adjudicator’s
evidentiary findings which are required to be reviewed on the deferential standard
of reasonableness.
[11]
CIBC
does not dispute that it carried the burden of proof to establish that the
dominant reason for the termination of Mr. Muthiah’s employment was the
discontinuance of a job function. It argues, though, that the Adjudicator
erred by assessing the merits of the decision to terminate Mr. Muthiah and
by elevating certain evidentiary issues to legal prerequisites for the
application of ss 242(3.1). These arguments are summarized in the following
passages from CIBC’s factum:
7. The Applicants submit that the
Adjudicator’s conclusion that INTRIA did not meet the evidentiary onus of
establishing the section 242(3.1)(a) exemption under the Code is the
product of errors in law and would lead to the imposition of an unworkable onus
of proof on employers in section 242(3.1)(a) cases that in turn would render
the jurisdictional exemption to the unjust dismissal regime created by
Parliament ineffective. Significant inefficiency and unpredictability would arise
where Parliament had intended section 242(3.1)(a) to allow employers to
conduct business without being second-guessed by Adjudicators appointed under
the Code. This decision arguably removes the operational freedom and
insulation from arbitral scrutiny that section 242(3.1)(a) was intended by
Parliament to provide employers in situations where business needs require
reorganization of the workplace.
[…]
38. Notwithstanding the evidence in
the record that clearly demonstrated the Respondent was the only employee
responsible for deposit slip sorting function before the elimination of his
position, the Adjudicator engaged in an efficacy analysis of the process
change, which impacted the Respondent’s position. The Adjudicator, in
hindsight, assessed INTRIA’s business judgment and came to her own conclusions
about the relative efficiency gains achieved after the changes were implemented
following the termination of the Respondent’s employment and thereby substituted
her own judgment for INTRIA’s.
[…]
63. The Adjudicator appears to rely
on the Howard and Maritime Telephone and Telegraph Co. [2000] 5 C.P.E.L.
(3d) 210 (Fed. T.D.) decision of this Court at paras. 33 to 36 for the
proposition that there is a requirement for a pre-conceived comprehensive
restructuring plan for the discontinuance of the employee’s function. It is
submitted that this case does not support this new and onerous evidentiary
standard, nor does it stand for the proposition that action taken after
the date of termination cannot be considered by an adjudicator in determining whether
a function has been discontinued for section 242(3.1)(a) purposes. From a
common sense perspective, the restructuring is necessarily implemented
following the discontinuance of the employee’s function.
[12]
CIBC
argues that in considering the application of ss 242(3.1)(a) an Adjudicator is
not entitled to assess the wisdom of a termination. It says that the purpose
of this provision is to preserve the employer’s right to manage its business as
it sees fit including the right to make decisions which might later be shown to
be unwise. I agree with that position. When an employee is laid off on the
basis of a lack of work or because of the discontinuance of a function the
jurisdictional enquiry under this statutory provision is limited to the
examination of the bona fides of the employer’s decision, which ordinarily
will not involve an assessment about whether that decision was economically or
operationally astute. What the Adjudicator is entitled to examine, however, is
whether the employer’s decision to terminate was made for protected business
reasons or for some other purpose, including a disguised form of discipline. The
assessment of the bona fides of the employer’s decision may require an
examination of its ostensible rationale but, where the decision is shown to be
legitimately based on a lack of work or the discontinuance of a function, the
merits of the choice are of no remaining concern.
[13]
The
essential weakness of the CIBC’s assertion of error on this issue is that the
Adjudicator did not examine the wisdom of the decision to dismiss Mr. Muthiah.
Her decision clearly states that the question before her was not whether CIBC’s
decision was appropriate but whether she had sufficient evidence from CIBC to
satisfy the burden of proof. She also held that “employers are free to
restructure and cut costs as they see fit”. In the end the Adjudicator was
simply not satisfied with the quality of the evidence tendered by CIBC and
dismissed its objection accordingly.
[14]
If
the concept of judicial deference is to mean anything it surely must apply to a
decision like this one involving the weighing of evidence. The Adjudicator had
the benefit of hearing the witnesses from both sides and concluded that CIBC
had failed to meet the burden of proof required to oust her jurisdiction. The
obvious and often-mentioned testimonial disadvantage of a reviewing court is
magnified in this case by the absence of a transcript of the testimony from the
hearing below. I am thus in no position to determine whether the Adjudicator’s
characterizations of the testimony could reasonably be drawn and I have to
accept her findings more or less at face value.
[15]
What
is apparent from the decision is that CIBC failed to put forward sufficient
plausible evidence of its motive for dismissing Mr. Muthiah to bring its
decision within the protection afforded by ss 242(3.1). That is not an
unreasonable conclusion to reach in the face of CIBC’s apparent failure to
tender the best available evidence. The documentary record submitted to the
Adjudicator indicated that a number of CIBC managers had been involved in the
decision to terminate Mr. Muthiah and that Mr. Sharma was acting
primarily as a messenger. The failure by CIBC to call the manager who was
apparently directly responsible for the decision (Ms. Gordon) was appropriately
noted by the Adjudicator and, by itself, could have supported an adverse
inference: see Thomas v Enoch Cree Nation Band, [2003] FCJ No 153, 227
FTR 236 at paras 50-51. At the same time, CIBC’s pre-termination documents
offered almost nothing of substantive justification for the decision, and the
weight of its post-termination business characterization was appropriately
discounted by the Adjudicator. After all, what was important to the central
issue was evidence bearing directly on why Mr. Muthiah was chosen for
termination and not on how the decision was subsequently framed or packaged by
someone in human resources.
[16]
I
do not agree with CIBC that the Adjudicator misapplied Flieger, above,
by relying upon part of the dissenting opinion of Justice Claire
L’Heureux-Dubé. It is clear that the Adjudicator correctly understood the
legal test for applying ss 242(3.1) and acknowledged that a bona fide
decision to eliminate a position through the re-assignment of duties to others
will fall within that provision. In the end the Adjudicator simply held that
CIBC had failed to make that case on the strength of the evidence it tendered.
The fact that CIBC can now point to a more favourable interpretation of the
evidence than was drawn by the Adjudicator is not a basis for judicial review.
My role is only to decide if the Adjudicator’s interpretation was reasonably
supported by the evidence and clearly it was.
[17]
There
is nothing in the decision to support CIBC’s further contention that the
Adjudicator considered the absence of a re-organizational plan for the
elimination of Mr. Muthiah’s position to have more significance than it
deserved or, conversely, that she erred by discounting the weight to be
assigned to CIBC’s stated post-decision rationale. CIBC’s failure to
adequately document in advance its supposed business case for the decision is
surprising and the Adjudicator was fully entitled to take that into account.
Similarly, it is well-established that an employer’s ex post facto
justification for a termination may, in appropriate cases, be viewed with some
scepticism: see Howard v Maritime Teland Tel, [2000] FCJ No 1758, 196
FTR 130. In the face of CIBC’s failure to call a witness with some direct
knowledge of the choice of Mr. Muthiah, these further deficiencies in its
case provide ample justification for the Adjudicator’s conclusion.
[18]
Finally,
I do not agree that the Adjudicator’s discussion about the after-the-fact ad
hoc reassignment of most of Mr. Muthiah’s duties constituted, by
itself, a reason for her denial of relief to CIBC. This part of the decision
is nothing more than a further commentary on the strength of CIBC’s case and
this evidence was not treated as a bar or pre-condition to the application of
ss 242(3.1)(a).
Conclusion
[19]
The
Adjudicator’s decision is thorough, thoughtful, well-supported by the evidence
and contains no discernable errors of law. This application is accordingly
dismissed with costs payable to the Respondent in the pre-agreed amount of
$5,000.00 inclusive of disbursements.
JUDGMENT
THIS COURT’S JUDGMENT
is that
this application is dismissed with costs payable to
the Respondent in the amount of $5,000.00 inclusive of disbursements.
“ R. L. Barnes ”
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